BVI Ranked As Largest Source Of Hong Kong’s Foreign Investment

by Mary Swire, Tax-News.com, Hong Kong

11 October 2005

The British Virgin Islands was the largest source of foreign investment flows into Hong Kong during the second quarter of the year, according to figures released recently by the Hong Kong Census and Statistics Department.

The data showed that the British Virgin Islands accounted for 29.2% of Hong Kong's $4.8 billion external receipts, higher than China (25.7%), the United States (9.5%) and the United Kingdom (4.9%). According to the department, this reflects "continued investment income inflow from this tax haven economy where Hong Kong companies had set up a considerable number of holding companies".

The mainland of China and the British Virgin Islands were also the most important destinations for Hong Kong's external outflow in the second quarter of 2005, accounting for 20.6% and 16.9% respectively. Other major destination countries/territories included the United States, at 15.3%, and the Netherlands, at 9.9%.

A Hong Kong Government Secretariat spokesman noted that the inflow and outflow of such investment income posted substantial increases in the second quarter of 2005, on the back of improved corporate profitability worldwide as well as increased interest income due to higher interest rates.

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